Brexit Bulletin: Ex-Prime Ministers Warn of Buyer’s Remorse

Tony Blair and John Major see a way out

Moscovici: EU Will Defend Interests in Brexit Talks

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Former residents of 10 Downing Street are lining up to advise Prime Minister Theresa May on Brexit.

In an interview with the New Statesman published yesterday, Tony Blair said voters could eventually decide the benefits of the splitting with the European Union don’t outweigh the costs  of doing so.

“It can be stopped if the British people decide that, having seen what it means, the pain-gain, cost-benefit analysis doesn’t stack up. It is like agreeing to a house swap without having seen the other house.”

Meantime, the Times reports today that John Major told a private dinner that the “tyranny of the majority” shouldn’t dictate the terms of Brexit and that “he could not accept” those who had voted to remain in the EU should have “no say.” He added there was a “perfectly credible case” for a second referendum, the newspaper reported. 

DERRY, NORTHERN IRELAND - JUNE 9: Sir John Major and Tony Blair speak as they walk across the Peace Bridge on June 9, 2016 in Derry, Northern Ireland. Former Prime Ministers Sir John Major and Tony Blair travelled to Derry City in Northern Ireland warning that voting to leave the EU could "jeopardise the unity" of the UK. They suggested that it may cause Scotland to re-visit an independence referendum and put Northern Ireland's "future at risk".  Both politicians were instrumental in bringing peace to the region.  The Vote Leave campaign has said the idea that a Brexit could threaten the Northern Ireland Peace Process was irresponsible.  (Photo by Jeff J Mitchell-WPA Pool/Getty Images)

DSir John Major and Tony Blair in Northern Ireland, June 2016

The interventions will draw accusations from the pro-Brexit movement that Blair, Major and other “Remain” supporters are seeking to block the will of the electorate. Billionaire Richard Branson is already reported to be funding a campaign to derail Brexit. 

Still, polls show voters are minded to stick with the result of the June referendum. John Curtice, professor of politics at Strathclyde University, has said he sees “very little sign” of a rethink by the electorate.

The worry for Brexit supporters is that the longer it takes to make the break, the more voters may reconsider their decision or that lawmakers will seek to soften the terms of the departure rather than make a clean break.

Either could happen if the economy reverses its early resilience. The Institute for Fiscal Studies yesterday said Britons are set to suffer the worst deterioration in living standards for 70 years as inflation-adjusted wages prove lower in 2021 than they were in 2008.

Brexit Trouble in Southwest London

Also weighing in is former Deputy Prime Minister Nick Clegg, whose Liberal Democrats are using a special election in southwest London as the first ballot-box test of May’s handling of Brexit. The election was called when Conservative lawmaker Zac Goldsmith resigned over the expansion of Heathrow airport.

“If you tell the electorate what an election should be about, they have a habit of saying ‘we’ll say what it’s about,’” Clegg said in Richmond last week. “A win for us here would act as a powerful antidote to the way in which the country is being railroaded towards a hard Brexit.”

The Liberal Democrats held the seat until 2010 and see a chance of a comeback as they make their case for another referendum.

‘Three-Tier Approach’

The U.K. won’t be able to begin talks on a final Brexit deal until May has agreed how much money it will pay to leave the bloc and resolved border issues,  Maltese Premier Joseph Muscat said.

 The 27 remaining members of the EU are taking a three-tier approach to exit talks, Muscat told the BBC. The U.K. will firstly have to agree to a departure payment to the bloc, before settling its EU border arrangements.

“Only after those two areas have been resolved, that third negotiation will start --which is what type of new relationship will there be between the U.K. and the European Union,” Muscat said. “There will not be a situation where the U.K. will have a better deal than it does now -- it simply cannot be.”

The comments echo a report from Sky News on Friday that Michel Barnier, the EU’s chief Brexit negotiator, will not begin talks on the final trade deal until “pending issues” are resolved.

On the Markets

Two of Scotland’s biggest fund management firms have a message for the currency market: it’s time to give the pound a break.

Sterling’s 16 percent slide since the U.K. voted to leave the EU reflects a changed economic reality, according to Standard Life Investments and Kames Capital.

That means there’s little reason to aggressively sell -- or buy -- the currency until the details of the U.K.’s new relationship with the EU and the economic implications become clear.

Separately, JPMorgan Chase strategists declared this week that Brexit has prompted the second-worst sterling crisis of the last four decades as the currency’s decline fluctuates in severity between the 18 percent drop after leaving the Exchange Rate Mechanism in 1990 to the 30 percent slump of the financial crisis.

The currency is sensitive to how much access to the single market will be contained in the Brexit deal and could swing as much as 10 percent on whether the government keeps or rejects ties, the strategists said.

Brexit Bullets 

And Finally…

Add pet shops to the list of retailers suffering from the Brexit vote.

Pets at Home Group, the U.K.’s largest pet-supplies retailer, said Thursday that business conditions could be hurt by prolonged uncertainty over the country’s EU exit terms and the continued weakness of sterling. 

Brexit indecision “could lead to a slowdown in the U.K. economy and consequent loss of consumer confidence, impacting trading conditions for the group,” the Cheshire-based company said in a statement. 

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(Corrects name of JPMorgan Chase in 14th paragraph.)
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